Written by Devon Boen
Wolf Exploration and Fort Worth Operating, two oil and gas companies from Fort Worth, Texas, have developed a large scale oil exploration plan for a portion of the Fort Peck Reservation.
Wolf Exploration was founded in 2011 by George Young Jr. with the specific purpose of drilling on the Fort Peck Reservation in mind. Young has been in the oil and gas business for over 30 years, but wanted to start a company from the ground up because of the scope of the project.
Fort Worth Operating had previously drilled in the area and helped Wolf Exploration secure leases across the eastern part of the reservation. Wolf now has leases covering 135,000 acres of land and Fort Worth has leases covering about 50,000, according to Young.
The companies held three meetings in both Poplar and Wolf Point last week to explain the complex nuances of their project.
According to Young, he and his team have developed a three-prong approach for handling their oil exploration endeavors that would consist of conducting a programmatic environmental assessment, taking a 3D seismic of the land and forming three Indian units. One additional unit would belong to Fort Worth Operating.
The programmatic environmental assessment is an in-depth study that will identify the social and economic impacts and health and safety risks that oil exploration will have on tribal members and other community members. It will identify any sensitive cultural resources that need to be preserved, and will identify wildlife and natural resources.
The assessment will also evaluate foreseeable development and potential infrastructure needs and will address possible air quality issues it may cause.
Young said the assessment could possibly take up to two years, but that time could be shortened and completing the assessment would actually shorten the wait-time for obtaining permits and speed up the drilling and development process.
Young said the next step of taking a 3D seismic is crucial. At the Wolf Point informative meeting, he compared a seismic to an MRI. The process allows companies to gain an in-depth geological understanding of what’s underneath the land and make better choices when it comes to drilling.
The 3D seismic could take up to six months to complete and Wolf Exploration wants to start the process this summer but it has been running into regulatory challenges. Young said he wants to get it completed as soon as possible and hit the ground running.
Wolf Exploration analyst Will Rogers said Wolf Exploration and Fort Worth Operating are in the process of trying to form four Indian units. The Indian units are four separate groups of land on the eastern part of the reservation. To form a unit, the company has to control at least 85 percent of the leases in the designated section. Each unit contains both trust land and fee land. Young said Wolf Exploration had secured enough leases in one unit area and were continuing to work on the other two. Once enough leases are secured, the BIA has to approve the formation of each unit.
Rogers explained that by forming units, the companies will streamline the oil exploration process and will be able to make more calculated decisions when it comes to drilling.
After forming the units, both companies have to get a permit to drill in each individual area.
Once all the criteria are met, an oil and gas company has 180 days to drill a mandatory horizontal well in the designated area, in this case meaning one of the units. If a well isn’t drilled on the designated land within that time, the unit will dissolve, but the primary leases purchased earlier will be intact for the remainder of the lease terms.
After the first mandatory well is drilled, the company has to drill a second mandatory well within 180 days and would face the same consequence of a unit dissolving. Young said this meant Wolf Exploration and Fort Worth Operating had to drill eight mandatory wells that would carry a $65 million price tag if they successfully formed all four units. Six wells would belong to Wolf and two would belong to Fort Worth.
After drilling the mandatory wells, both companies are required to continuously work on a development plan. Essentially, neither company can cease development on the units without having them dissolve. Young hoped he and his team would be able to determine if drilling in the area would be commercially viable after the mandatory wells were drilled.
If enough oil was found to be considered commercially viable, Wolf Exploration would take a more aggressive drilling approach and Young predicted that hundreds of wells could be drilled, resulting in large royalty payments for land owners.
Young said there has been very little drilling activity on the eastern portion of the reservation and attributed it to operational reasons rather than geological ones. He explained a lot of companies haven’t wanted to deal with the added regulations and red tape that come along with drilling on an Indian reservation.
Young believed it was to Wolf Exploration’s advantage that the area had not received a lot of attention. He said Wolf Exploration was working hard with the BIA and tribal leaders to meet all necessary requirements and believed it would be able to work the Tribes and the TERO office to enhance opportunities for people living on the Fort Peck Reservation who want to be involved in oil drilling and development. He said those who favored the project could help by voicing their support to the Bureau of Indian Affairs.
A lot of other nearby communities including Williston, N.D., and Sidney have suffered the effects of rapid growth due to the oil boom. Young said Wolf Exploration specifically developed the three-prong approach so that oil development would occur over a longer period time — crucial time that would allow proper updates to be made to infrastructure, sewer systems, housing and all other affected entities. He said Wolf Exploration would also be working closely with local leaders in regards to infrastructure needs.
While oil exploration efforts can mean overcrowded roadways and high rent prices, it can also mean economic growth and development. According to Young, community feedback has been positive — from those who would benefit directly from oil drilling, as well as those who simply want to see the area benefit from the economic boost oil would supply to the area.